Andy Watson takes a look at the last two transfer windows in England to see what we can learn about the impact of new Brexit regulations on football in the UK.
It is no great revelation to say that the transfer market in the UK is in a state of transition. The COVID pandemic is having a huge impact on some clubs’ ability to generate revenue and the uncertainty of the financial situation across the whole UK economy means that there remains a reticence to sanction major investment.
In the midst of this, there also lies the added complication of Brexit. The UK’s decision to leave the European Union left football organisations with a decision to make. The flow of ‘workers’ that was available to football clubs due to freedom of movement within the EU was closed off in January 2021 and replaced by a Governing Body Endorsement (GBE) system that requires any player (we’ll get to managers later in the series) to pass a threshold of points to be able to play football at any level in England.
This series of articles will attempt to assess the impact of the GBE system and then identify where any opportunities might exist for clubs in England. Where there is an element of chaos there is always opportunity.
The Story So Far
At this stage, it is almost impossible to assess fully the effect of GBE rules on the football industry. Business conditions have been effected by the global pandemic and the timing of this alongside Brexit upheavals make it very difficult to isolate one from the other. However, it is still interesting to look at the current picture and discover where English clubs have spent their money in the transfer market and why.
Before we dive into the research it is worth touching on the actual changes themselves. In January 2021, the FAs rules on receiving a Governing Body Endorsement were enforced. As these were only released in December 2020, clubs had very little time to adjust their plans accordingly.
To give a brief overview of the GBE system, players brought into the UK to play professional football need to score 15 points or more over a series of qualifying caveats. Any player that is a regular international (70% of minutes) for a country ranked in the Top 50 of FIFA’s rankings gains an automatic pass, but if that doesn’t apply then the qualifying criteria come into play.
The main factor in this points system is in which league the player plays and how often they play. The world’s leagues have been divided into ‘Bands’. Players from Band 1 leagues are almost guaranteed to earn a GBE, because the player receives 12 points for being registered to a Band 1 league club and so only needs to play a small number of minutes to get the requisite 15 points total. Band 2 players are also likely to qualify, as long as they have played 40% or more minutes for their club then they will get a GBE. Band 3 is achievable, but 80% of minutes being played is required, unless the player earns points from other categories. It is much tougher to identify qualifying players from Band 4-6 leagues as, no matter how much they play, they cannot earn enough points from domestic football alone. Players from those leagues will need to acquire points from elsewhere, such as: continental competition appearances, cup competitions, title wins or through the youth criteria.
The research conducted here uses Transfermarkt figures from their ‘Transfer Flow’ tool. This means that some undisclosed fees have not been included in the data set. However, we can still get a good idea of the trends from the vast majority of transfers into England’s top four leagues. The sample also excludes loans and transfers within clubs (i.e. promotion from u23/B team to the first team.)
Here are some of the stand-out findings from looking at the market from the last five seasons:
Fewer players are being transferred into clubs in England
There is a clear reduction in the total number of players being signed by clubs over the last few seasons. From a high of 752 in 2017/18, the number of players signed in 20/21 is down to 558, a reduction of 26%:
Taking the figures league by league, it is also clear that some divisions have changed more than others. The Premier League and Championship have seen a substantial reduction in permanent transfer activity. Further down the pyramid, League One and League Two have seen numbers of players brought in remain relatively unaffected. In fact, League Two saw a rise in the number of players signed by clubs, its highest level since the 2017/18 season:
The 81 players signed on a permanent transfer in the Premier League amounts to a mean of 4 per club. In 2017/18, that figure was up at 7.35 players per club.
There are a number of possible reasons for this decrease: more sophisticated and “picky” transfer policies, increased fees for individual players, increased use of the loan market, financial constraints and COVID, and, also, GBE/Brexit. More analysis needs to be conducted, though, to try and pinpoint the effect that Brexit has had.
Clubs are spending less on players in England
The evidence of a decline in transfer activity is just as clear when you look at the total transfer fees paid by clubs:
First of all, this figure throws into sharp focus how much more the Premier League clubs spend than any other division. It is also clear that the Championship’s spending has reduced markedly in recent seasons. The financial difficulties that are being felt by Championship clubs such as Derby County and Reading at the moment are likely to be only the tip of the iceberg. The reality of fighting for promotion to the Premier League is taking its toll on the balance sheet of the vast majority of Championship clubs.
A reduction in spend in the Championship from £255m in 17/18 to just £37.4m in 21/22 (so far) is a stark 85% reduction. Consideration should be made for the fact that Transfermarkt doesn’t calculate undisclosed fees into their transfer flow model, it is, therefore, difficult to be exact on those figures. Both totals are likely to be higher, though, so we can be confident that the trend is real even if the exact figures cannot be calculated satisfactorily.
This is the first indication that suggests that the Championship may well be the league that suffers most from the changes in GBE requirements. Although players like Martin Payero and Rodrigo Muniz have arrived from Argentina and Brazil respectively—divisions that were previously effectively closed to Championship clubs—the size of the market for clubs at Championship level has clearly been reduced.
The number of Players imported from abroad has reduced dramatically in the Championship this summer
This graph displays the percentage of players who are transferred into the English divisions from other domestic clubs (i.e. those that don’t require any GBE):
Interestingly, the Premier League has shown very little change in percentage, fluctuating around the 45% mark. League One and League Two understandably almost solely recruit domestically but the real change for 21/22 is that the Championship has shot up from ~75% domestic bias to over 90%.
Direct comparison between summer 2020 and summer 2021 indicates some GBE impact
In an attempt to try and focus more on the GBE issue, I have taken the key data from summer 2020 and summer 2021 so that the comparisons can be made fairly.
In effect, summer 2020 was the last window in which most of the players in the EU could move to English clubs without having to go through the GBE points system. At that point, though, there had not yet been an announcement made by the FA on what the criteria were going to be once the Brexit process was completed. Some clubs may have been able to guess with a degree of likelihood what would happen and start to plan accordingly, but the uncertainty will have greatly affected that planning process for clubs.
Taking the Premier League in isolation, it is fairly clear to see a real difference in the players signed by the 20 top English clubs:
In summer 2020, far more players were brought in, especially from leagues that are now Band 5 and 6 per the GBE legislation. Because of Brexit, these bands are now almost completely out of reach. Only two players—Bendeguz Bolla for Wolves and Kaoru Mitoma for Brighton, both of whom have been sent out to Europe on loan—came into the league from those bands in 2021.
For the Premier League, though, as we have seen above, there have been fewer players signed total. Domestic, Band 1, Band 2 and Band 3 transfers have all reduced in number, despite the fact that those bands are very much still within reach for the majority of players.
The Championship picture is somewhat different. The number of incoming players has actually risen this summer compared to last, but this is where GBE really has bitten:
As we saw before, domestic bias has risen drastically and it is those smaller leagues in Bands 4, 5 and 6 that have suffered. Leagues such as 2.Bundesliga, Ligue 2, and leagues in Poland, Austria, Scandinavia, markets which smart Championship clubs with strong European scouting network might’ve exploited before Brexit, are now practically non-existent as potential sources of players.
A trend which makes slightly less sense on the face of it is that Band 1 transfers have disappeared. Squad players from the top divisions may still be on the radar for Championship clubs but none have moved to the division this summer. Does this indicate a premium on the best homegrown players in a post-Brexit UK? This is a situation worth monitoring going forwards to see if summer 2021 is an outlier.
Future articles in this series will look more deeply into the intricacies of shopping in the Band 3 Leagues (Brazil, Argentina, Russia and Mexico). It’s interesting that some clubs from the Championship have taken an early dive into those markets. Perhaps this is a place where some smart clubs could get an early head start.
Leagues One and Two display a contrast to the higher divisions:
Here the effects of the COVID pandemic are more apparent. The reticence to bring in players in summer 2020 is clearer to see in comparison to the business of the summer transfer window just gone.
Both leagues have seen an uptick in the number of players brought in generally and especially domestically. Intriguingly, both leagues have still felt the impact of GBE introduction. Some clubs had been use to utilising the European market but largely in lower leagues and “unusual” leagues that are now effectively closed off by the new regulations.
Both leagues saw a drop in the number of players brought in from Band 6 leagues from last summer to this. Though some of these transfers, especially in this summer, were for English players returning from far-flung locations (Joe Garner, Aaron Amadi-Holloway, Macaulay Gillesphey, Kwesi Appiah, Jamie Hopcutt, Callum McManaman, etc.) some clubs, especially Oldham Athletic, were using that market consistently to try and bring in a diamond in the rough (e.g. Dylan Bahamboula.)
Questions Arising From The Data
Looking at the data, a number of questions arise about the future of English club transfer activity:
Are the GBE restrictions going to encourage clubs to shop domestically?
One of the argued reasons behind the FA’s GBE system is that it will give greater help to domestic players to have the chance to play.
“The system meets the joint objectives of the Premier League, EFL and the FA allowing access to the best players and future talent for clubs, as well as safeguarding England teams, by ensuring opportunities for homegrown players.”The FA, Dec 2020
Early indications are that, in terms of transfers coming into the country, it is making a big difference in the second tier. The incoming transfers in the tiers below the Championship were >90% domestic based already but the Premier League has remained pretty stagnant in terms of the percentage of domestic players being signed. However, given there has been a reduction in the total number of transfers the Premier League clubs have made, this suggests that the number of domestic players being given “an opportunity” at a top club via a transfer may have been reduced slightly.
That said, the fact that fewer players are being brought in from the EU—as well as domestically—may well mean that young players who are being developed through club academies have a clearer route into first teams. This is a trend that we can only analyse a bit further down the line after a few transfer windows under these conditions.
Could GBE restrictions be shutting down potential avenues for clubs to generate income?
We have seen in the data that some clubs are now no longer able to use their European scouting networks in more untapped markets to try and find players that may have been missed by others. Some clubs were able to use this model very effectively to drive progress both financially and on-the-pitch. The most striking example is Brentford, of course but other clubs were trying it too.
We mentioned Oldham Athletic briefly earlier. The Lancashire club have brought in at least two players from Europe every year for the past three seasons. Although it has not helped their fortunes (the club is currently rooted to the bottom of the Football League), the signing of Dylan Bahamboula does have the potential to be lucrative for them as he is interesting suitors further up the ladder.
We have seen in this study how even Championship clubs haven’t signed many players outside of the UK. The incentives derived from GBE criteria could end up curbing some of the reckless transfer activity which saw Championship clubs signing some poor European talent for big money. Conversely, denying clubs below the Premier League the opportunity to access a larger talent pool across European leagues could destroy important sources of income from smart player trading, a sad side effect of these restrictions.
Are English clubs going to have to pay top dollar for talent that they could have picked up earlier and cheaper?
With the difficulty of signing players from outside the established leagues in Bands 1-3 there is the possibility of English clubs not being able to capitalise on early talent spotting.
There will be some cases of players emerging in lower European leagues or elsewhere in Bands 4-6 which could previously have been recruited right away. Now, English clubs will have to wait until they get a move into a higher-banded league to be likely to be eligible for a GBE before moving to England. By this stage, the price tag of the player may well be a few hundred percent greater than it would have been earlier in their career.
More time and further investigation will be required to see if this theory is proved or not. Players such as Patson Daka, Enock Mwepu, Albert Sambi-Lokonga have found their way into the Premier League as their first major move so it may not be a huge issue, but it’s certainly worth monitoring and revisiting at a later stage.
Is it worth English clubs scouting outside of GBE Bands 1-3?
Connected to the previous point is the fact that a lot of clubs have wide-ranging scouting networks in the modern game. Is it financially viable for these clubs to continue to run these operations, especially in regions that are now very difficult to sign players from (i.e. Bands 4-6)?
This is the topic for the third piece in this series but again it is likely that the answer will only become apparent in the future with more data to assess.
With only two windows of data and the COVID pandemic to factor in, it is difficult to make certain conclusions into how the GBE restrictions are changing things in the transfer market.
However, what can be taken as a given is that the recruitment departments in the smartest, best-managed clubs are already ploughing ahead with their strategies and taking these arrangements seriously. What this means for the remainder is that the best-value talent available will be gone before they get there. With a talent pool that is drastically reduced (more of which in the second article in this series), if you hesitate or work without a clear plan then you will lose out.
For some clubs, this won’t be as big of an issue as they are big enough and rich enough to absorb the pain. But for lower Premier League, Championship and even ambitious League One/League Two clubs, there are going to be clear recruitment advantages to be gained whilst the market settles.
Now we know where we stand in the current climate, the remainder of this series of articles is primed to give some pointers towards where those advantages may lie and what we would consider to be the best tools and techniques to use to be successful, especially for a mid-ranking club.
Keep an eye out for Analytics FC’s upcoming release of a free to use GBE Calculator, compatible on desktop and mobile. The GBE Calculator model is already embedded in our flagship data scouting platform, TransferLab. The GBE Calculator will allow you to assess the eligibility of any player in our database to play within the UK at the click of a button.
Header image copyright IMAGO / Colorsport